Section 301 Shields 10% Tariffs

The Trump administration has found a new legal road for its global tariffs after the last one ran into the courts. This time, the White House is leaning on Section 301 of the Trade Act of 1974, a law that allows Washington to impose duties after investigating foreign practices it says damage American commerce (White House). The new duties came into force on July 24 and cover 60 economies. For EU goods, the combined tariff generally comes to 10% (Morgan Lewis).

For European exporters selling €554 billion of goods a year into the United States (Eurostat), the immediate problem is not only the 10% figure. It is that Washington may now have found a way to keep the tariffs alive for longer than many firms had assumed.

Why this legal route is harder to kill

The Supreme Court struck down the administration's earlier tariff regime because it rested on IEEPA, the International Emergency Economic Powers Act, a 1977 emergency-powers law that does not actually give the president authority to set tariffs (NPR). A temporary measure under Section 122, a balance-of-payments tool limited to 150 days, gave the administration breathing space while it built a more durable structure (Thomson Reuters).

Section 301 is that structure. The US Trade Representative opened 60 investigations in March, accusing each economy of failing to ban imports made with forced labour. It collected more than 1,600 written submissions and heard evidence from over 100 witnesses before setting the tariff rates (White House). The paperwork is not incidental. It is the legal armour. Courts looking at Section 301 tariffs must ask whether the government misused a legitimate trade tool, rather than whether it picked a statute that never allowed tariffs in the first place (Forbes).

Legal challenges arrived within hours. The Liberty Justice Center says the forced-labour argument is a pretext, designed to rebuild the global tariff wall the courts had already rejected (Liberty Justice Center). UCLA tax-law professor Kimberly Clausing described the tariffs as "clearly unlawful" (CNBC). But it is usually harder, and slower, to prove abuse of process than to show that the wrong law was used. Unless judges accept the pretext argument early, quick relief looks unlikely.

Who pays, and how the cost travels

The tariff operates as a tax at the American border. The US importer pays it, then decides whether to swallow the cost, pass it on to consumers, or push the European supplier to lower its price (Alvarez & Marsal). For European companies, that last route is where the pressure lands.

The exposure is not evenly spread. Pharmaceuticals accounted for 29% of EU exports to the US in 2025. Ireland alone sent €160.6 billion in pharma products to American buyers, almost 43.8% of all EU pharma exports (Eurostat). PwC Ireland said Irish pharma was temporarily protected by exemptions, while warning about Trump's threat of 100% tariffs on generics within two years (PwC Ireland). The exemption is holding for now. Whether it survives into next year is the issue Irish pharma executives now have to build into investment decisions.

Germany feels the blow through its industrial base. The ifo Institute found that more than 60% of German industrial firms said US tariffs were hurting them, rising to 74% in the automotive sector, where ifo said tariffs were "hampering investment activity" (ifo). That does not remain a German problem. When German carmakers cut orders or delay model investment, suppliers across central Europe lose volume. The German auto sector has already shed more than 70,000 jobs in 2024 and over 40,000 in 2025 (Eurofound).

Italy shows the other side of the same story: what uncertainty does to small firms before the full cost is even clear. Confartigianato, the Italian artisan-business federation, reported that in sectors dominated by micro-firms, including food, fashion and furniture, ten months of tariff uncertainty led to an 8.3% fall in US sales (Giornale delle PMI). For a Parmigiano producer, the tariff rate matters. Knowing whether it will still apply when the next container leaves port may matter more.

Duration is the real pressure

A tariff does not have to survive a final Supreme Court judgment to alter trade. It only has to last long enough to change contract prices, delay factory investment and push firms to reroute supply chains (FreightWaves). Eurostat figures already point in that direction: the EU-US goods surplus fell from €81.2 billion in Q1 2025 to €40.8 billion in Q3, a pattern consistent with exporters bringing shipments forward before expected tariffs and then pulling back (Eurostat).

By moving from an emergency proclamation to an administered trade remedy with a thick procedural record, Washington has given itself a legal basis that could keep duties in place through years of litigation. For European firms built around predictable access to the American market, the question is no longer just what tariff appears on the invoice. It is how long they have to live with it.